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Mad River Glen Cooperative

Board of Trustees Meeting

Minutes – Saturday, September 13th, 2008

 

 

After due notice, a meeting of the Board of Trustees of the Mad River Glen Cooperative was convened at 8:11 a.m. on Saturday, September 13th, 2008 on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.

 

Trustees Jay Appleton, Lars Bruns (Vice-Chair, dep. 11:02), Paul Finnerty, Liz Godwin (Secretary, late arrival), Geordie Hall, Betsy Jondro, Jed Kalkstein (late arrival), Bill Reynolds (Chair), Eric Schoenholz (Treasurer) were present.Also present were President Jamey Wimble and two shareholders.  

 

CALL TO ORDER:

Trustee Reynolds called the meeting to order at 8:11 a.m.  He welcomed the shareholders and took a moment to remember recently passed shareholder Paul Berzatsy. 

 

REVIEW OF MINUTES:

Regarding the draft June 7th 2008 minutes, Trustee Hall moved to accept them and Trustee Schoenholz seconded the motion.  The trustees present approved the June 7th minutes as-is, without changes by a vote of 7-0, with Trustees Godwin and Kalkstein abstaining due to late arrival. 

 

OPENING SHAREHOLDER COMMENTARY:

Shareholder Betsy LaFlamerequested that the mountain take appropriate steps to recognize Paul Berzatsy.   

 

MANAGEMENT REPORT (President Wimble):

President Wimble discussed the management report.  Under warranty Doppelmayr/CTEC have sandblasted and re painted all the chairs as well as stiffened the hold-down tower at mid-station in hopes of resolving the wobble at the mid-station.  Trustee Kalkstein asked about the cause of the wobble.President Wimble mentioned the length/distance between the towers and the fact that lattice towers allow more movement.  It looks good so far but we won’t know until it is tested fully loaded.  Chair numbers and plaques will be done for Green and Gold Weekend.  Chair numbers will be painted on.

 

Twenty-year capital plan research discovered some I-beam deterioration underneath the Office/boardwalk structure.  An engineer has investigated and researched the problem.  A temporary fix will be in place shortly.Replacement of this I-beam will be a capital project for next summer.  No estimate received yet, but the access should be pretty easy.  

 

The retail store is up and moving along and will be open during the week/office hours.  We want to ensure lots of flexibility for Mad Money usage.  We have put ~$14K for setup into the store.  ~$14K expenses.  We bought out ~$10K in inventory from Alpine Options.  

 

Mountain has held up well despitethe heavy summer rains this summer.  This was due in large part to the ditch and culvert work done by MRG staff.

 

Basebox renovations are coming along and are going well.  Electrical work was well done.  Inspector found some housekeeping items.  We did receive some energy credits from Efficiency Vermont.  New fixtures, countertops, sinks in the women’s room are looking good.  The basement flooring material is a ‘walk off mat’ with strong/heavy-wear rubber made of recycled material.  It is well rated for wear and tear.  The ladies room has different flooring material which should be good at preventing slips and falls. 

 

Waterless urinals are still being investigated for the mens room – some issues with odor being investigated as well as grant monies.  Also, we will be researching/investigating dual flush commodes.

 

Share sales: sold three this month, sold 32 vs budget of 36 YTD.  All queued redemption requests from prior fiscal years that had been suspended have been redeemed.Redemptions requested this year will be paid at the end of the fiscal year once we get the audited financial results.

 

17 shares have come in for redemption this FY – President Wimble says that APR coming out tends to cause a blip in redemption requests.

Trustee Hall wonders if liftlines are causing any tenders; Pres. Wimble thinks not.He notes that we did see a few after the vote on the Single renovation.

Trustee Schoenholz:were there any complaints about carrying value vs. net value?

One shareholder had a problem; Pres. Wimble and Sharon pointed out that he could write to the Board regarding his concern.Informing shareholders that we are following by-laws helps because they know it’s not an arbitrary decision.Trustee Appleton said that quite a few realized the reasoning behind the bylaw once it was explained.Trustee Bruns said that some shareholders weren’t fully aware of the bylaws and/or implications.

Discussion:we’ve lost money nearly every year, so it hasn’t created a problem yet.

There is one shareholder who was upset about the discrepancy between the two values but that his true complaint was that due to no email access he was unaware that we were selling old chairs.Trustee Reynolds noted that the shareholder had received written notice through an article published in the Echo newsletter. Shareholder S. Kalkstein asked why not sell him a chair to make him happy.

Board responded that 1) we only have new chairs, not the old ones; 2) that would set a precedent for other shareholders.

Shareholder B. Rogers suggested that we send a Mad Card to each of the 38 who were on hold as a gesture of goodwill.

Trustee Reynolds answered that it was a lot of money to give away; Trustee Bruns reiterated that it would be a dangerous precedent financially.

 

 

Financials

August Financials

August financials came in on budget and we are still projecting a $150K- $180K profit for the yr.

$280K left on single loan; pledged money can cover loan – it won’t come out of operating expenses.

Trustee Kalkstein: how much of $312K cash is from pre-season sales?How is a capital reserve set aside?

Pres. Wimble – it’s a mental note – not formalized.

Trustee Kalkstein requested that FC look at the $280K cash excess from last year and contemplate putting it into a separate capital fund.

Trustee Hall asked if the Single maintenance account would be a separate account made up of money over the cost of lift.Pres. Wimble advisedwe can do that, but we’re probably not going to have excess funds; he will double-check.PTV may ask for status so he highly recommends a separate account.Trustee Schoenholzstated we already have a separate account.

Cost of money on the Single Loan is coming down – last one is about $60K.

Trustee Schoenholz - all money in “single fund” could be synonymous with maintenance fund.

Trustee Bruns -can money be used for operations; no, only for single chair-related things.All we use it for right now is paying off the loan.

Trustee Kalkstein said that of the $312K, roughly $30K is preseason; we will burn about $80K in September.We’re down to $200K now, some capital plan expenditures will draw on it as well.About $15K is cash from single account.We end up w/about $100-125K in cash from operations but should look at it carefully.

Trustee Hall stated that it’s not put in budget for coming year yet.

Pres. Wimble: one thing we may want to do is put a policy into effect regarding what we draw the cash down to at any given time, so we can be ready for a rainy day.

Trustee Bruns - “set an alarm” as it gets to a certain level.

Trustee Hall -if we lose Christmas break, an “alarm” should go off.

Pres. Wimble has prepared a plan (plan B) ready for what things should start being cut back week-by-week if we get into a poor season.He has provided this to the board members on the finance committee (Schoenholz, Kalkstein, & Bruns) for review.Once it has been reviewed by the Finance Committee it will be brought to the Board.

 

Trustee Schoenholz asked for explanation of camp income for August.

Pres. Wimble:a lot of the fees came in during April; camp is behind budget but some is spread out; we still made money on camp.

 

Trustee Schoenholz:retail shop is not in report.

Pres. Wimble replied that it’s in the management report; because it’s just starting up, it wasn’t in financials.

Trustee Schoenholz: it would help for taxes if it’s in financials.

Pres. Wimble said it will be there for audit; he didn’t put it in this time so we can have basis for comparison.

 

We will not be in a Federal taxable situation this year due to expenses.Next year there will be a loss carry forward and we’ll have $100+K coming in pledges.

Trustee Hall:does VT have an inventory tax?

Pres. Wimble thinks Fayston does.Trustee Hall pointed out that there could be savings depending on when it’s assessed.

Trustee Bruns said facilities for August was over the budget.

 

Capital Plan

Trustee Schoenholz: Reviewing the Capital Plan and our progress so far do we expect NBY’s (Not yet billed expenses)to come in on budget?Pres. Wimble doesn’t expect surprises.

 

Trustee Hall noted we were $40K below budget – what did Pres. Wimble project for final numbers?He sees us being under, not over.

Trustee Bruns: what happens if we’re under budget, can Jamey do more?

Trustee Kalkstein: Pres. Wimble should come back to us for approvals, then.

 

Trustee Hall asked if there was anything else besides water sealing the Birdcage that has to happen during nice weather that could prevent damage.Per Pres. Wimble, not until next summer – siding on office building.Trustee Hall recommends looking for other small things we could do that would be energy-efficient.

Discussion: we could have a capital expenditure “slush fund.”

Trustee Hall thought that expenses that are below a certain cost should be given carte blanche;Trustee Kalkstein said the FC is more efficient than the Board and to let something like that go to them or the Exec. Committee.Executive Committee is authorized to do that and is quick-acting.

 

SHARE REDEMPTION PROCEDURE

 

Trustee Appleton:by-laws say we can pay out patronage rebates if we don’t need them for capital.When someone cashes out, we could give them their rebates at that time.Allocation of net loss can be accounted for in different ways as per by-laws.

 

Sharon pointed out that we are supposed to pay it out when shares are redeemed.

 

Trustee Kalkstein: when we authorize a rebate, they can take cash or leave it on share account.Rebates left in a shareholders account are added to the carrying value of share.The time to determine that we need excess profit for capital is before giving a rebate.We can’t take money back after that.

 

Discussion ensued as to whether this is clearly worded in the by-laws.It was decided to leave the wording alone and not attempt to change the by-laws to become clearer.The money in question is small change in the grand scheme of things; goal of procedure is not to eliminate all ambiguities.

Trustee Hall said it needs to be clear now so that in future if it’s challenged there’s no question about it.

Trustee Appleton said to eliminate from the second bullet in the procedure the following:“not needed for capital purposes, as determined by the Board.”

 

Discussion ensued regarding unpaid APR when shares are tendered.We can deduct an unpaid APR.Do we want to do that to someone who’s already leaving?

Trustee Schoenholz wondered what would happen if someone didn’t pay APR all season and then tendered in the spring?

Trustee Appleton pointed out that bylaws section 10.6 allows for lien on rebates.

Pres. Wimble said thatwe should send out a copy of section 10.6 to shareholders who are redeeming and inform them that it’s done annually and paid around December.

Trustee Appleton noted that the purpose of the document under review is to set a uniform procedure for office and Board.

Trustee Kalkstein said that what’s important is that when shareholders get a letter about share redemption, if they have a question and call the office, they get an answer that’s consistent with what happens.

Trustee Bruns added the importance of the Board understanding what’s going on also.

Trustee Appleton just wanted to get a procedure that is definitely in compliance with by-laws.

Trustee Kalkstein:marketing material from long ago is inconsistent with procedure.

Trustee Finnerty do we need to rescind previous policy/procedure and replace with this one?

Trustee Hall said that we’re micromanaging if we have to give authorization to change a letter.

Trustee Finnerty said that the Board adopted policy a few years ago which is inconsistent with procedure; he sees necessity for fixing that.

[discussion ensued r.e. micromanagement, letter, etc.]

Trustee Kalkstein asked for a motion.

Trustee Appleton on “4th bullet” – I think we’re OK

Trustee Schoenholz thought not; we’re doing redemptions @ end of FY , so any profit/loss has been rolled into value of share.We don’t need that language because it’s happening at end of year.

Trustee Kalkstein said it was an absurdly small possibility to have discussion of patronage rebates because we don’t do well enough to give them; Trustee Appleton said that the point of discussion is for future clarity.

Trustee Kalkstein said that shareholders decide whether they want to get cash or keep on books, if the latter, the calculations don’t affect it.At some point, we could declare a rebate but not pay it; that would negate the option of getting cash at that time.At tender, we would have option to see if we needed that and pay or not.

Discussion regarding necessity of bullet point#4.Trustee Appleton brings up possibility of “endgame” – run on shares if we “go down.”

Trustee Godwin asked if it would hurt to leave it in?Could hurt to take out.

Trustee Hall asked if there was any reason not to leave it in.

Essentially, it protects Co-Op in disaster.

 

 

Motion

Made by

2nd by

Aye

Nay

To rescind previously adopted redemption policy.

Trustee Finnerty

Trustee Reynolds

9

0

 

Motion

Made by

2nd by

Aye

Nay

To adopt the share redemption procedure as amended.

Trustee Kalkstein

Trustee Hall

9

0

 

When is the audit done?Sometime in November, then approved at the December meeting.Add redemptions to December as a regular item.

 

Trustee Kalkstein: do we post policies and procedures on website?Let’s post it.Variety of things have to happen for shares to get redeemed.Important thing is that management can effectively answer questions now.

 

Sharon wanted to know how far back in time to go regarding unpaid APR.

Clarification:if a SH has elected not to pay APR and loses privileges, this would not be deducted.

Sharon:for the 19 people in the queue, this was not procedure when they asked to tender.Are they grandfathered?

 

Trustee Kalkstein: Trustee Hall is saying that with 38, we realized correct approach and fixed it for them, and applied it to them.Now we realize we’re supposed to do that for the 19 remaining.That’s the way the cookie crumbles – we have to do it the right way.

Trustee Reynolds asked if there were representations made to shareholders by management that they didn’t have to pay APR?Anyone who has tendered a share does not pay APR for this year.

Trustee Finnerty reminded the Board that if a shareholder doesn’t pay the APR, technically we can take the share.

Trustee Appleton said that 2.1 speaks to eligibility; “owners in good standing”; does tendering put you not in good standing?[correct]

Therefore any APR’s that were assessed during suspension are off table.

Trustee Hall asked:do we want to say ‘sorry, we didn’t follow rules correctly,’ or give these 19 a free pass?

Trustee Finnerty noted that failure to follow by-laws does not create new precedent, legally speaking.We should follow by-laws.

Sharon pointed out that shareholders might be disgruntled, as no mention had been made to them of our asking for unpaid APR monies.

Trustee Bruns asked what we do with people who don’t pay APR.[According to Sharon – nothing]

Trustee Godwin asked if delinquent shareholders get a letter informing them that they can’t vote that year.[No - ballot is just thrown out.]

Trustee Kalkstein asked what happens second year?[nothing!]

Trustee Finnerty wanted to know how many people are >1 yr delinquent on APR, look at the figures and see the extent of the problem.

 

Trustee Kalkstein requested that for the next meeting, the office provide a list of shareholders with past due APR’s back seven years..

Trustee Hall pointed out the necessity of declaring a delinquency date for the future.

Trustee Bruns thought there’s probably a higher percentage of non-payers in redeemers than in active co-op.

Pres. Wimble asked if we wanted these data for all shareholders [yes]

Sharon pointed out that we only have four yrs. of data in current database.[Request revised to include data for past four years only.]

Trustee Bruns expressed concern that the cooperative does not account for or roll-forward unpaid APRs citing that the mountain is a Cooperative and not a charity.

 

Sharon wanted to know what to tell shareholders this month in letter; they were originally told they’d get redeemed in September.

Trustee Kalkstein said to pay them out minus past due APR and explain that it’s in accordance with the by-laws.

Pres. Wimble clarified that people who tendered during this year have to wait a year.

Trustee Kalkstein concurred - if they tendered this year, we should stick with practice of doing it next FY.

Trustee Bruns had an idea.Would it be clearer procedurally if we adopted it at end of FY?How do we handle someone who tenders tomorrow?[answer: after audit in December]

We cannot knowingly violate by-laws.This means we have to deduct past-due APR’s from these 19.

 

Recess: 10:24

Return:10:32

 

National Historic Registry(NHR)

 

Trustee Godwin pointed out that Feb ‘04 Echo has a whole Q&A section regarding NHR.

Trustee Reynoldsasked the board members for their opinion on how we could best educate shareholders on the NHR issue such as an article in the Echo, discussion in town meeting?Trustee Reynolds also noted that the Board needed to determine how the decision on NHR will be made, either by Board vote or put in ballot to the shareholders?

Trustee Hall asked if we were assuming that we would be going ahead with it.

Trustee Reynoldsasked the board members to weigh in with their opinion as to whether NHR was a Board issue (i.e. like the covenant on the Single) or is it controversial and big enough to take to shareholders?

Trustee Kalkstein didn’t think it met the criteria for a shareholder vote.

Trustee Bruns wanted a straw poll via the annual election to indicate interest for or against the NHR for the Single.

Trustee Hall said that the initial story on Richmond bridge was that they “couldn’t repair due to NHR” – people perceive it as limiting; it’s important to educate shareholders.

Trustee Finnerty: if it goes on ballot, needs to happen at January meeting.

Trustee Appleton said the Board had the same discussion with covenant when that was an issue; restrictions were even greater, and that was a board vote, not a shareholder vote.

Trustee Finnerty said that even if it goes on as a straw vote, it’s probably not going to put an end to the issue.Would ignite a firestorm of controversy – would we vote to do it or not?Doesn’t think there will be a clear mandate.Wouldn’t want to do it if not a clear mandate.

Trustee Kalkstein said there are three possibilities for NHR listing:1) do it at all?2)do it for whole area?3) do it for Single.If we had a poll, we’d have to be clear about what it would encompass.

 

Trustee Hall thought listing for Single was a no-brainer; we have a covenant anyway.

Trustee Finnerty asked what’s the benefit?Have you really made a decision to ski at an area based on its being on NHR?

Trustee Reynolds said that if we became first ski area on NHR that would be newsworthy and might draw visitors.

(Discussion ensued about value of reading articles about places and deciding to go there.)

 

Trustee Reynolds said we need to decide how we’re going forward and whether we need to make it a ballot question.

Trustee Kalkstein was worried about incrementalism.Once we’re on the list, future Boards may go ahead and apply for grants.

Trustee Reynolds said we should focus on question at hand.

Trustee Finnerty asked: to extent that board represents shareholders, why would we consider NHR?No decision has been made in discussions over several years.

Trustee Hall responded that the discussion, over the last few years, was deferred at request ofSingle Chair Campaign Committee so as not to have two issues.

 

Straw poll revealed seven qualified “yes” votes to NHR and two “no.”

 

Trustee Kalkstein asked if we could approve the listing with a caveat that we couldn’t ever apply for federal funds?

Trustee Finnerty wondered if there might be the concern that we become like ski areas on federal land - that we’d have to allow access to all forms of snow sports.

 

[Trustee Bruns departs]

 

Trustee Appleton said that we should consider whether to apply ourselves as a Board, let shareholders know that it’s under consideration.

Trustee Hall said there’s a big difference William Hogan - Co-op SH

Payment plan - 860 298-2774 between considering it and going ahead.

Trustee Reynolds advocated to move forward by putting together an educational process for shareholders.

Pres. Wimble asked: what if we had a guest from Waitsfield Common (NHDistrict) explain how it’s been for them.

Trustee Kalkstein posed question to Trustee Finnerty: if it were clear that taking fed money would require a shareholder vote, would Trustee Finnerty be in favor of listing?

Trustee Finnerty said he doesn’t want to leave MRG in lesser condition than when he joined Board.If you create new interest in the property ….he looked at federal cases and saw that citizens sued on behalf of an NHR property to prevent certain things.Whether or not they’re successful, who knows?But “it changes the game.It cuts both ways.”

Trustee Reynolds asked if Trustee Finnerty would be willing to write a negative view of NHR by Nov 8.

Trustee Hall asked about putting entire area on registry.

Trustee Kalkstein worried that taking federal money would be the type of action that could create soundness in “cons” arguments.Just listing - not so much so.

Pres. Wimble said that if this comes down to Act 250, we can’t get a definite answer because it’s up to NHR board interpretation.

Trustee Schoenholz suggested that the homeowners meeting should have a presentation regarding this.A lot of hoops already exist now for homebuilders; what would this add?

Trustee Reynolds: will put NHR on agenda for Nov 8th.

 

 

Committee Reports

 

Finance Committee (FC)

 

Has not met since July.Subcommittee has been discussing w/Pres. Wimble about the comp tickets.

The value of “deals and specials” is over $200K.Some are in the form of trades.Some have economic value; usually we get more value in return.

Majority of comp tickets we see because they show up on the flash reports.The subcommittee reviewed those and went back to look at history.The challenge was to have management and staff reduce these.Subcommittee wants to evaluate comps and have Pres. Wimble come up with percentages of reductions.

[At this point Trustee Hall wanted to have Trustee Jondro and himself recuse themselves due to nature of discussion, believing that it was related to evaluation of management.Trustee Schoenholz clarified that they were simply trying to make the performance review more quantitative, not discussing actual performance.]

Trustee Kalkstein pointed out that comps are not itemized in marketing budget; perhaps they should be.

FC subcommittee also recommends giving away value passes, not full passes.Military should get day passes and we can then track when they’re used.

The number Trustee Schoenholz quoted does not include employee passes, family passes or day tickets.

[A discussion ensued regarding recusals and avoidance of micromanagement.]

Pres. Wimble just wanted to be aware of how cutting off people’s passes might affect future patronage.

Trustee Reynolds commended the subcommittee for its efforts.

 

 

Single Chair Campaign Committee (SCCC)

 

SCCC has been disbanded.Leadership gifts committee has been disbanded and thanked for efforts.Trustee Hall will be a liaison when issues come up.

$1.68M now, projection of$1.70-1.71M as pledges come in.

Thirteen chairs are left for sponsorship; will be listed in Basebox.

Trustee Reynolds commended the committee for its work.Trustee Hall commended Betsy Jondro, Deb Steines, Eric Schoenholz, and Sharon Crawford for their efforts.

 

Shareholder Bob Rogers said Stark Mountain Foundation will be sending$70Kto PTV this month.

 

 

Executive Committee

 

Trustee Reynolds reported that the executive committee approved one “extraordinary circumstances” request for redemption from a shareholder with a serious illness.

 

 

Elections and Board Devo

 

Trustee Reynolds asked if there was a calendar to be forwarded to Marketing Director Friedman.

Feb 21 is Candidates’ Forum – set by default.

Trustee Finnerty pointed out that procedurally, at first meeting of new board, chair designates committees and members, but we’ve been doing that by default.Trustee Reynolds officially appointed Trustee Finnerty as the Chair of the E&BD Committee.

 

20th Hole

 

Pres. Wimble said no changes so far.Jay Appleton put together a map.

Three scenarios have been put together regarding potential Co-Op action.

Trustee Hall asked if we knew what we have right of first refusal (ROFR) on?

Pres. Wimble said that the deed specifically mentions Mad Rive Corp. land and Mad River Barn Inc.

 

 

Trustee Reynolds mentioned some upcoming dates of note:

Town Meeting is Sat, Oct 4 from 4-5 p.m.

Oct 18and Oct 25 are mountain work days with Jay and crew.

 

 

Motion

Made by

2nd by

Aye

Nay

To go into executive session.

Trustee Kalkstein

Trustee Reynolds

9

0

 

 

Motion

Made by

2nd by

Aye

Nay

To leave executive session.

Trustee Kalkstein

Trustee Reynolds

9

0

12:13 out no business done

 

Motion

Made by

2nd by

Aye

Nay

To adjourn.

Trustee Hall

Trustee Schoenholz

9

0

 

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